What makes a successful founder
We often get asked about the differences between the Entrepreneur First companies that make it and those that don’t. It’s something that I and the rest of the EF team think about a lot. We’ve tried focusing on selecting a certain type of technical background, encouraging particular ideas, changing the way we build teams etc, but on reflection none of these are as important as the mindset of the founders.
It’s not the smartest people, it’s not the best idea, it’s not the strength of the team — in the early days of building a startup (the first 200), it’s all about mindset.
Mindset sounds pretty flippant, it sounds like a new age way of saying we don’t have an answer for this, but this is the best way to summarise what is often talked about as grit, determination and resilience.
I stumbled upon the work done by psychologist Dr Carol Dweck and it struck a chord. It sounded like a neat way of explaining how we think about mindset at EF and how this impacts the kind of founders we select and the training we do.
The two mindsets
‘I don’t divide the world into the weak and the strong, or the successes or failures…I divide it into the learners and non learners’
Dweck identifies two mindsets:
“In a fixed mindset people believe their basic qualities, like their intelligence or talent, are simply fixed traits. They spend their time documenting their intelligence or talent instead of developing them. They also believe that talent alone creates success — without effort.”
“In a growth mindset, people believe that their most basic abilities can be developed through dedication and hard work — brains and talent are just the starting point. This view creates a love of learning and a resilience that is essential for great accomplishment.”
Why does this matter for founders?
Over the last 3 years we have worked with more than 160 individuals who we have selected for their intelligence, technical ability and founder potential. We have seen these individuals go through building their co-founding team, releasing their first product, trying to get customers and raising finance. It’s been an interesting test bed to see how the two mindsets play out and how it affects different founders. Here’s what we have learnt:
Growth mindset founders learn more and move faster
“Some students were caught up in trying to prove their ability, while others could just let go and learn”.
Dr Carol Dweck
So much of being a successful early-stage founder is based on your ability to learn. A growth mindset focuses you on learning at every turn. Often a misinterpretation of being a founder is that you need to be foresighted enough to know exactly what you need to build. At EF, we focus on ‘strong beliefs, weakly held’ and what this means is that founders need to know where they’re heading at any one point in time, but they need to constantly update that based on what they have most recently learnt.
Learning is at the core of starting any successful startup. Particularly for first time founders, who are learning about the product they should build and the customers they should work with, AND learning about how to be a founder at the same time.
A founder’s approach to learning seems to be a key component in their ability to move faster than their peers. At EF, we have had highly technical, introverted engineers who have learnt to be fantastic sales and commercial founders. We have had founders, who are experts in a particular technical domain, immerse themselves in a completely new industry in order to find customers, speaking to as many people as possible and becoming experts in their own right. These are the founders who have shown that they have the growth mindset.
“Nothing is harder than saying I gave it my all and it wasn’t good enough. So we don’t try at all. We give ourselves get outs.”
Dr Carol Dweck
Growth Mindset founders also move faster as they aren’t afraid to give it their all. We find that founders with a fixed mindset are more likely to find excuses as to why they aren’t making progress. For example, they haven’t been able to find the right person to speak to, or there is a reason why they haven’t shipped this week (again), or there were personal reasons outside of their control etc.
Fixed mindset founders, particularly those who are used to being academically or professionally successful in the past, create situations where they don’t have the opportunity to fully try. Why? If there are external reasons for why you couldn’t try or succeed, it prevents you from ‘failing’. How can you have failed at something if you didn’t give it your all? For some people, that means never giving it their all. These founders move very slowly, if at all.
The growth mindset allows founders to take more risk
When did failure turn from ‘this failed’ to ‘I am a failure’?
The growth mindset allows founders to separate the results of their work with their self-esteem and self-image. If, as a fixed mindset founder, you are putting your self-esteem and self-image on the line every time you try something new, it makes you more risk adverse. If certain actions had the chance of making me feel bad about myself and my abilities, I would shy away from them. Wouldn’t you? And although that is a stark description, this happens subtly on a daily basis for many founders.
This can look like:
they haven’t found the right moment to ship the product,
everyone they spoke to loved their product, or
investors loved the product.
The above are scary moments where failure could happen and by not shipping, by not listening to critical feedback or by asking for critical feedback from the wrong people, these founders are pursuing activities that confirm their abilities, rather than challenge them. At EF, because we select exceptional technical talent, we see a lot of founders focusing on building product — it proves what they know they’re already good at and delays the risk of failure when they try and learn new skills, like customer development.
On the other hand, the growth mindset founders take the risk of their product failing and ship quickly so that they can get real user feedback. They see customer feedback as a way to learn and get better (rather than taking it as an affront on their product design ability). They don’t speak to investors to get feedback, instead they speak to customers who will actually use the product and they take on the risk that those customer may not like it. What’s more they ask customers tough questions that get to the truth.
When every ‘risk’ is turned into a learning opportunity, it’s much easier to actively pursue them. Growth mindset founders see taking more risks as finding more opportunities to learn.
A growth mindset makes founders more resilient
Failure and startups are often talked about in the same breath. At EF, because we work with such early stage startups, the main cause of failure is the founder or founders giving up. It’s not that they don’t have customers, or revenue, or lack a clear way forward — this is typically true for all of our companies in the early days — it’s that they are tired of the constant ‘set backs’ that founders experience. It could be that they are getting negative responses from customers, it could be that they can’t get customers to pay for what they’ve built or it could be that the idea they were pursuing is now showing no promise.
Resilience is one of the most important attributes for founders. Founders who see every daily ‘failure’ as a learning opportunity are able to develop far greater resilience than their fixed mindset peers. When the perception is that you’re learning every day, rather than failing, you can see progress and keep going. Our most growth mindset founders not only recognise that the setbacks are a learning experience, they recognise that the successes are too. Rather than resting on the laurels of their latest sale, the growth mindset founders immediately try to see if they can replicate it.
You can change
The amazing part of this is that if you recognise fixed mindset traits in yourself (and we all have them to some extent), this isn’t a death sentence. Dweck’s work has shown that we can train ourselves to be more growth mindset. And I believe even knowing about it is a step in the right direction.